Associated Press
Businessman Lewis Katz and philanthropist H.G. “Gerry” Lenfest are taking over Philadelphia’s two largest newspapers with an $88 million auction bid.

PHILADELPHIA — Philadelphia Inquirer co-owners Lewis Katz and H.F. “Gerry” Lenfest won control of the newspaper and its parent company Tuesday after a bidding war with other owners in a private auction at a Philadelphia law firm.

Katz and Lenfest bid $88 million, a figure that includes the assigned value of all the shares of the company plus existing debt recently pegged at about $15.3 million.

In doing so, they outbid George E. Norcross III, Joseph Buckelew and William Hankowsky, the other owners with whom they formed Interstate General Media Holdings LLC in 2012.

Scattered applause broke out as the result reached the Inquirer newsroom, just before 11 a.m.

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Inquirer Editor William K. Marimow — fired by publisher Robert Hall in October with the support of Norcross and later reinstated by a court decision — received congratulations and handshakes from gathered reporters and editors.

“I’m really pleased that Gerry Lenfest and Lewis Katz prevailed. I believe they are committed to the kind of public service journalism that Philadelphia, its suburbs and South Jersey really require,” Marimow said. “At the same time, I know they realize how important it is for the Inquirer, the Daily News and Philly.com to be in the vanguard of the multimedia world. There’s a lot of hard work to be done.”

Marimow said he has received no assurances from Katz and Lenfest about his job going forward, but that he was eager to stay on as long as the newspaper’s owners desired him to do so.

At a news conference, Katz and Lenfest said they will begin a search to replace Hall as publisher. Hall, leaving the auction site Tuesday morning, declined to comment. Lenfest later said he understood that Hall wanted to retire.

The auction, closed to the public and press, followed nearly a year of turmoil and division among the partners of IGM, and is likely to result in more changes in the company. Besides The Inquirer, IGM also owns the Philadelphia Daily News, three websites and a printing plant.

The five partners held all of the IGM shares so Tuesday’s auction decided which group would buy all the shares of the other group. Before the auction, the Norcross group had 57.45 percent of the shares, while Katz and Lenfest had 42.55 percent.

Those partners, plus a sixth, paid $61 million to form the company two years ago. But a dispute between Katz and Norcross over how they would run the company as co-equal managing partners led to litigation and then dissolution of their partnership, with the auction used to decide who gained control of the company.

Though it percolated for months, the dispute erupted and litigation began after Marimow’s firing. A Philadelphia judge reinstated Marimow, but denied Katz’s request to have Hall removed.

“Frankly, that’s been the reason that Gerry and I have spent all this money, trying to right what we think was a wrong,” Katz testified April 15 in Delaware’s Court of Chancery, where the dissolution of IGM and the auction format was decided.

“Although we declined to submit a higher bid and will not purchase the shares of Interstate General Media owned by Messers. Katz and Lenfest, we are happy for the company’s employees, readers and advertisers that this issue is now resolved,” Norcross said in a statement. “It is time to return the company’s focus to journalism, and away from conflict among its owners.”

This marks another ownership change for the Philadelphia newspapers, which form the region’s most prominent media organization and employ about 1,800 people. The company was bought and sold twice in 2006, went through a bankruptcy and has had two groups of local owners, in between ownership by a group of hedge funds.

Katz, 72, grew up in Camden, N.J. He graduated from Temple, then Dickinson School of Law, and has given millions of dollars to both schools. Practicing law gave way to business ventures.

Katz made money with banks, billboards and parking lots then made more by putting billboards in or on parking lots. He said owning pro sports teams (New Jersey Nets and Devils) was a money loser, but he sold the Nets for twice what he and partners paid after they combined the Nets and Yankees in a regional sports TV network, the YES Network, in 2002.

Lenfest, who said recently he made about $1 billion when he sold his cable company to Comcast in 1999, has spent most of his time in recent years giving away his fortune to philanthropic causes.

He was the last of six men to join the original ownership group. In the original partnership agreement, Katz and Norcross each held 26.2 percent of IGM.

Bill Ross, executive director of the union that represents newsroom employees, said he hopes the new owners will not seek more concessions from the guild.